ASIC starts penalty proceeding against Westpac
The Australian Securities and Investments Commission (ASIC) has commenced civil penalty proceedings against Westpac in the Federal Court for breaching the provisions of the National Consumer Credit Protection Act 2009.
According to ASIC’s investigation, Westpac failed to “properly assess whether borrowers could meet their repayment obligations before entering into home loan contracts” in the period between December 2011 and March 2015.
The regulator also said that the proceedings followed its review of interest-only home loans in which ASIC had reviewed the responsible lending practices of 11 lenders.
In particular, ASIC alleged that Westpac:
- Used a benchmark instead of the actual expenses declared by borrowers in assessing their ability to repay the loan;
- Approved loans where a proper assessment of a borrower’s ability to repay the loan would have shown a monthly deficit; and
- For home loans with an interest-only period, Westpac failed to have regard to the higher repayments at the end of the interest-only period when assessing the borrowers’ ability to repay.
Under the National Credit Act, credit providers were obliged to make reasonable inquiries about a borrower’s financial situation and assess whether a loan contract would be unsuitable for the borrowers.
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